Taking a Strategic Approach to the ‘S’ in ESG:

In recent years, the concept of sustainability has transcended a solely environmental focus to encompass a much broader set of considerations. While the ‘E’ in ESG has received significant attention, effort, and investment from regulators and organizations alike, the ‘S’ pillar, which pertains to social sustainability and social impact, is equally essential for organizations to address.

With the release of the UN Sustainable Development Goals and increased regulatory accountability when it comes to ESG – particularly as it relates to social issues such as Human Rights – we also see shifting priorities and increased scrutiny from investors, customers, talent, and community stakeholders. This is influencing the extent to which organizations are expected to report and act on their social sustainability activities and social impact.

Social sustainability is about developing prosperous organizations while aiming to ensure that current and future generations can thrive; live healthy lives; and be free of inequity and oppression. For an organization, this involves proactively identifying and managing business impacts on employees, workers in the value chain, customers, and communities. It encompasses a company's commitment and activities related to issues such as human rights, DEI, labor practices, and community engagement, among others.

Social impact goes hand in hand with social sustainability but refers specifically to the positive and negative impact of an organization’s activities on stakeholders and society at large. Social impact involves measuring and understanding the tangible impacts of an organization’s activities on people.

By embracing social sustainability, organizations can attract business partners and investors; enhance employee morale and engagement; drive innovation to unlock market opportunities; and even bolster financial performance. Integrating social impact into business strategies not only advances ESG agendas but also contributes to the well-being of society and the overall sustainability of the business.

Social impact strategy

Managing the impact of an organization on society is a complex yet important task. When it comes to making sure that your organization’s social sustainability activities are having the desired impact and are aligned with broader business goals, a strategic and intentional approach is required. This is where a social impact strategy comes in.

A strong social impact strategy can transform how a company operates, manages its workforce, and its relationships with suppliers, communities, and customers. It can create long-term value for stakeholders and is essential for organizations seeking to advance their ESG agendas, unlock competitive advantages, and positively impact society.

A social impact strategy is a comprehensive plan crafted by organizations to generate, measure, and connect positive social change to their activities. It involves creating measurable goals for social good; engaging all stakeholders; and aligning an organization's brand mission, operations, and desired social impact. This holistic approach entails planning across the organization and is essential for aligning social impact with overall business and ESG objectives.

An effective social impact strategy should:

A strong strategy starts by defining clear objectives, targets and outcomes, and how to achieve them. This involves clearly articulating mission, vision, target beneficiaries, desired impacts, and aspirations.

Defining clear objectives and outcomes allows organizations to focus their resources on the initiatives that have the greatest potential for impact, rather than spreading efforts across many potentially less effective projects.

Objectives and outcomes provide a framework for measuring progress and impact. Choosing the right success indicators is essential as it can allow the organization to measure progress on its goals and progress toward meaningful outcomes. By defining what success looks like, organizations can track their performance year over year, adjust strategies as needed and demonstrate accountability to stakeholders.

Alignment with existing business priorities such as brand and strategy can be essential to help maximize social impact, ensure alignment with organizational values, and ultimately drive sustainable change.

For example, a social impact strategy can help reinforce brand values and mission by creating a coherent narrative that resonates with stakeholders and demonstrates a commitment to addressing issues that matter to them. This alignment can enhance trust, loyalty, and engagement with customers, employees, investors, and the community at large.

By aligning social impact with overall business strategy, organizations can make informed decisions that can potentially benefit both the bottom line and society, allowing them to identify opportunities for growth, innovation, and competitive advantage while driving positive change. Integrating social objectives with revenue and growth strategies allows for the creation of synergies that support long-term value creation and impact.

It is important that a social impact strategy addresses key stakeholder groups and demonstrates that the organization understands how its activities could impact these groups.

Stakeholders could include employees, investors, community groups, business partners, suppliers, and customers. Engaging them in development helps organizations tailor their social impact strategies to address real-world challenges and opportunities. It also helps to make sure that the strategy effectively addresses the needs of stakeholders and is truly impactful.

Taking a long-term view helps organizations shift their perspective from short-term gains to sustainable outcomes. One way to do this is by leveraging data and applying a social impact measurement approach.

Social impact measurement is an ongoing process that requires regular data collection, analysis, and feedback to track progress, identify trends, learn from successes and challenges, and adapt strategies accordingly. Not only can this support informed decision making and strategizing, but it can also identify gaps in an organization’s approach or areas where they are not having the desired impact over time. This provides the organization with opportunities to make changes as necessary, ultimately making their approach more sustainable.

A long-term view of social impact strategies can catalyze more meaningful change across stakeholder groups and communities, and ultimately contribute to organizational success.

Getting started

While social impact strategies are multi-faceted, getting started doesn’t have to be daunting. To get started on creating a social impact strategy, begin by asking the following questions designed to support a detailed and effective approach:

It is important to understand what the internal and external drivers of social sustainability are for your organization. To do this, seek answers to questions like these ones about the external environment:

What political or economic factors are influencing sentiment and activities in your market?
How are social behaviors and expectations changing, and how might that affect your business?
What are new or imminent reporting standards or regulations that may affect the way your business operates?

Taking more of an internal focus, it is important to understand things like:

What workforce issues currently exist?
How would I like the brand to be recognized in the current landscape?
What role does social impact play on my overall business strategy?
What do I want to be known for in the community?
Which of my business activities have the greatest social impact?

When developing a social impact strategy, identifying key stakeholders is an important step. Here are a few things to keep mind:

Take a detailed view and identify stakeholders from across domains (e.g., employees, investors, community groups, business partners, suppliers, customers and regulatory bodies).
Incorporate stakeholders who may not typically be included in discussions but may be indirectly impacted by your organization’s activities.
Once identified, determine how stakeholders differ according to impact, influence, interest, or needs to tailor communication and engagement strategies effectively.
Begin to communicate and engage with stakeholders through channels like emails, calls, meetings, events, newsletters, social media, or blogs.
Seek to build trust, rapport, and mutual understanding with stakeholders by informing, consulting, involving, or collaborating with them.

By identifying a broad list of stakeholders and aligning with their needs, social impact initiatives can become more relevant, sustainable, and responsive, to changing circumstances over time.

Next, take account of all the current social impact actions and initiatives across your organization. When doing so, here are a few things to keep in mind:

Consider not only the activities that your organization labels as social impact, but also consider the social impact of your operational activities (i.e., how does the work you do impact your employees, environment and community directly or indirectly?).
Collect and review available data, organizational reports and engage with all business lines to understand what they are doing and what impact it is having.
Once you have taken stock in this way, assess where your strengths and opportunities are. This can help provide you with a starting point as you begin to develop your social impact strategy.

Collecting answers to questions like these can help you understand what should matter most in your social impact plan and indicate how to prioritize accordingly.

Determining what matters most to your organization and where you can be stewards in your industry, community, and ecosystem involves aligning your social impact strategy and vision with your brand and overall strategy to create consistency. Once your priorities have been identified, think about how you can implement, monitor, and communicate progress. This can help assess the effectiveness of the strategy, make necessary adjustments, and maintain accountability.

By prioritizing social sustainability in a strategic manner, organizations can demonstrate their commitment to ethical business practices; meet the expectations of their stakeholders; and contribute to a more sustainable and inclusive world. By embracing social impact, organizations not only drive meaningful change but also position themselves as leaders in a rapidly evolving, competitive marketplace.